The growth that the Indian automobile sector has witnessed has gone in to prove to be an all inclusive one. Not only are the auto makers dancing their way to the banks, the employment opportunity it has generated for hundreds of thousands of skilled and unskilled labor is unprecedented. In addition to it, the auto industry is filling the coffers of the Indian government like never before. According to a business daily, Business standard, the industry paid an astronomical 54 percent higher excise in the first half of the current fiscal year.
The industry grew at an exponential rate of 31 percent in the initial six months, and contributed Rs 11,901 crores in comparison to Rs 7684 crores it contributed for the same period last fiscal. The president of SIAM, Mr. Pawan Goenka was quoted as saying, the contribution of the auto industry has led to higher excise tax paid to the Government of India, courtesy to the massive growth that was witnessed in the first 6 months. The industry was optimistic about the future and foresees a similar growth for the remainder of the year and has asked the Government of India to desist from changing the tax structure in the forth coming budget in order to keep the current momentum going.
It must be noted that a 2 percent rise in excise was ordered by the government in the budget that was passed last year, which was a blanket rise for the entire vehicle segment without making a distinction. It must also be remembered, during the financial downturn, as part of the stimulus package the Government of India reduced the tax by 4 percent to induce demand. At present most, if not all, automotive segments pay a flat excise rate of 10 percent. However, cars that are deemed to be big are charged 22 percent. The contribution of the auto sector to the net excise collection of total Rs 60, 834 crores rose by 20 percent in the first of this fiscal in comparison to 18 percent for the previous year.
The production is expected to get a further shot in the arm with higher exports to various overseas market but more importantly strong demand for cars from domestic market.